The idea for this article came to me in a place that’s quite removed from financial advisor client communication arena. I was recently at a speech and debate match in which my daughter was competing. In a lull, while we were waiting for the winners to be announced, I struck up a conversation with another parent. I had never met this man before, and it wasn’t long before we were asking each other, “So, what do you do for a living?”
Usually, when I’m asked this question, I tell people that I’m a personal finance journalist — I then I get strange looks. “Personal finance journalist? Is that really a thing?” But my new acquaintance surprised me with his response. He was absolutely delighted – almost ecstatic – to find out that I wrote about money for a living. He said he loved all things personal finance and read everything he could on the subject.
So, of course, we started talking about money.
He talked openly about how he had paid off his mortgage, was maxing out his 401(k), and saving for his kids’ college education. I was impressed — he sounded like he was really on top of his finances.
However, he shared one concern. Was it possible that he and his wife were spending too much?
So, I offered him some advice that could help him align his spending with his values – in other words, putting his money toward things that mattered to him and his family (rather than stuff they didn’t really need). After we chatted for a while, he said something that really stood out to me.
He said, “I wish it was as easy for me to talk to my financial planner as it is for me to talk to you about my finances.”
I told him that it might be time to look for a new financial planner.
I’m not telling you this story to imply that financial planners aren’t good at communicating with their clients. I know that’s not the case.
But I do think that the ease he experienced in this conversation had a lot to do with the fact that I am a journalist. Financial advisor client communication can be complex to figure out, but what I’ve learned in my 17+ years in this profession might help.
In my journalism classes, I was taught to write for an audience with a fifth-grade reading level.
In other words, I was told to keep my writing simple.
When writing about a complex topic such as personal finance, it’s especially important for me to keep it simple because most people know very little about it. I can’t assume that my audience understands the ins and outs of getting insurance coverage, saving for retirement, or even budgeting. It’s my job to explain it to them.
You should do the same as a financial advisor.
Your clients were smart enough to come to you for help with their finances, but don’t assume that they have a good understanding of personal finance basics and financial products. They might not even know what questions to ask in order to get the help they need. When you discuss financial planning with them, don’t assume they’re not asking questions because they don’t have any. They might be too afraid to ask because they don’t want to look uninformed or uneducated about personal finance.
I’ve been writing about personal finance for 17 years, so I have a pretty good understanding of most financial terms and concepts. However, I have to continuously remind myself that my readers might not have this same level of understanding. I can’t simply throw out a concept such as “compound interest” without explaining it. The same goes for 401(k), IRA, HSA, FSA, and any other acronym. I define all these concepts in my articles, and you should do the same in your writing and in conversations with clients.
Financial terms that are common knowledge to you might not be part of your clients’ vocabulary. So, before you tell your clients they would be better off with a term life policy rather than a whole life insurance (or a Roth IRA rather than a traditional IRA), explain in detail what these terms mean.
As a journalist, I interview experts to share their tips and insight into the articles I write. So, it’s my job to ask questions and listen carefully to capture answers. Then I can ask more questions based on the responses I get. My goal is to get complete and clear information to share with my readers.
Some of my questions might seem silly or simplistic. But I need my sources to explain what’s often a complex topic or issue in the simplest of terms. That’s the only way I can clearly convey that information to my readers. I don’t want to leave anything up to my own interpretation, so I just keep asking questions until I get all the information I need, and until there is no chance for a misunderstanding.
For example, the parent I met at my daughter’s speech competition mentioned to me that he thought he needed to do better with his spending. So, I pressed him for details. What sort of things does his family typically spend money on? What made him think his spending was a problem? He wanted advice from me. But before I could share any advice, I needed to know exactly what was going on.
The more questions you ask of your clients, the better picture you’ll have of where they stand financially. This goes beyond what accounts they do or don’t have. How much do they know about personal finance? What issues might they be struggling to grasp? Is there a disconnect between what they know and what they do? Asking a lot of questions will help you figure out just how simple you need to keep it.
Just as it’s my job as a journalist to pry, you as a financial planner should get comfortable digging as deep as you can into your clients’ finances and financial decision-making processes. That’s the only way to get a clear picture of what’s really going on.
Actually, this is the first thing I try to do before interviewing people.
I know that talking to a reporter can be intimidating. So, I try to put people at ease with a little small talk before I launch into my interview questions. I often share a little bit about myself, so they don’t feel like they’re talking to a complete stranger.
I think my approach works. Many people whom I’ve interviewed over the years have commented on how easy it was to talk to me. Because money is such a taboo topic, it’s especially important to put people at ease in order to get them to open up. Keep that in mind as you build your advisor client communication approach. That way, they’ll come away thinking, “I’m glad it’s so easy to talk to my financial planner!”